Tag Archives: debt limit

The unseriousness of the Republican leadership: Boehner suggests linking the debt-limit hike to a restoration of recent cuts to military benefits.

First of all, only a few weeks ago the Republican leadership was telling us these cuts were essential, which is why they went along with them in the last deal. Second and more important, we have far more significant issues — Obamacare and the federal debt — for which any serious conservative in office should be far more interested in pursuing than the relatively small cuts to military benefits.

If the Boehner and the Republican leadership were really serious about rolling back Obamacare as well as winning elections, they would link every negotiation with that issue. We all know they would eventually have to back down, but the goal would be force the Democrats to vote for Obamacare, again and again, even as that terrible law is devastating families nationwide. Not only would it put them in a bad light, it would emphasize the differences between the two parties.

The day of reckoning looms: The federal government is on a pace to exceed its $16.394 trillion debt limit sooner than expected, by October, just before the election.

With the recently passed debt ceiling deal, there are going to be a lot of news reports talking about how that deal is going to force cuts and reductions in government spending. Everyone one of these stories will be a lie.

Take for example this story today in Nature, discussing the fate of science research under the deal. Here is how they describe what will happen if the Congressional “super-committee” cannot come up with an agreement and across-the-board “cuts” are triggered:

“Then there will be extraordinary pain,” says Michael Lubell, director of public affairs for the American Physical Society in Washington DC. “And it will get worse in 2014.”

The two-stage structure of the debt deal explains both the short-term reprieve and the long-term worry. The first set of agreed cuts, totalling US$917 billion, will be spread over 10 years, but two factors mitigate their effect. First, reductions to defence spending will account for a significant share of the cuts — meaning that other US agencies won’t bear the entire burden. Second, the cuts are heavily loaded forward onto the 2014 fiscal year and beyond, in an apparent effort to shelter the current fragile economy. Only minimal cuts will be implemented in fiscal years 2012 and 2013.

The trouble with this is that it is simply not true. There will be no cuts at all, under any condition, according the debt deal.» Read more

Finding out what’s in it: Federal payments required by Obamacare actually understate the cost by as much as $50 billion, according to a new study.

In May a congressional committee set the accounting rules that determine who will qualify for federal health care subsidies under the 2010 Patient Protection and Affordable Care Act. When the committee handed down the rules to the Congressional Budget Office, its formula excluded the health care costs of millions of workers’ spouses and children. The result was a final estimate for 2010 that hides those costs.

Get ready for another battle in Congress: The U.S. Treasury added another $20 billion in debt last night, putting it just $160 billion below the newly passed debt ceiling.

The total US treasury balance (subject to the ceiling) is $14.54 trillion (and $14.58 trillion for total), an increase of $20 billion overnight, the Treasury will hit its latest ceiling no later than the end of September. . . . The debt ceiling now is $14.694 trillion: a number which Tim Geithner will hit in about a month.

According to the bill that raised the debt ceiling, the ceiling is only raised in stages. The next stage of $500 billion requires Obama to request it and Congress to okay it.

The report above tries to look past the just signed debt agreement, but I wonder if maybe it was the debt deal itself that worried investors, since the deal really did little to gain control of the federal government’s out-of-control spending.

The outlines of a possible debt ceiling deal have been leaked to the press. No tax increases, and a lot of promised cuts, some real but many that are probably likely not to happen.

If true, this deal will represent a victory for the Republicans, despite what appear to be the weak nature of the cuts. And John Podhoretz explains why in a very cogent column today, using the Cold War as an analogy.

Everyone on the Right agrees that the U.S. is on an unsustainable fiscal path that must be altered. The difference comes down to the acceptance of political realities. Just as the United States could not effect rollback in the late 1940s (or any time thereafter), so too the Right and the Republican Party cannot effect a revolutionary change of course on July 31, 2011 with the Senate and the White House in liberal Democratic hands. The strategy, like containment, must have a longer time horizon, though it has the same goal: Ending the entitlement state before it swallows up the rest of the country.

That didn’t take long: The Senate has killed the Boehner debt ceiling plan that passed the House.

What the Democrats are missing in all this is that if no debt limit extension is passed, it is their beloved programs that will be hurt the most. The Republicans have more or less always preferred limiting government, so imposing the debt ceiling will only serve their purposes.

Thus, it is the Democrats who need the debt ceiling extended more than anyone. That they seem unwilling to agree to any deal or even propose one of their own seems the height of stupidity. Talk about cutting off one’s nose to spite one’s face!

I decided to look at the IRS data and calculate exactly how high would the tax rates have to be close this year’s budget gap of around $1.6 trillion (it’s $1.65 trillion according to the White House and $1.55 trillion according to the CBO). What I found was certainly not surprising but still quite disturbing.

Take a look yourself. It is very clear that increased taxes cannot solve the debt problem. It can’t even make a dent in it.

In other words, those advocating a “balanced approach” are really only avoiding the problem. In order to get the federal budget under control we have to cut spending. Nor should that be hard, considering that the federal budget has literally doubled since 1999. If we simply went back to 2000 numbers we’d almost certainly have a surplus, and no one would die nor would the world end.

The debt ceiling situation is really very simple. The Democrats won’t propose anything, nor will they vote for anything that cuts anything. And a large percentage of the new Republicans elected to office in November won’t vote for anything that doesn’t include real and significant cuts. The result is there simply aren’t enough votes to pass a bill. This might change, but based on what I’m reading I suspect that come next week, the federal government will have to find a way to live within its means. And I think that will be a good thing, despite the short term pain it will certainly cause to us all.

The $7 billion that [was described as] “a real, enforceable cut for FY2012″ represents what the Government of the United States currently borrows every 37 hours. If the CBO’s scoring is correct – that it reduces the 2012 deficit by just $1 billion – then the ”cut” represents what the United States borrows every five hours and 20 minutes. In other words, in the time it takes to photocopy and distribute Boehner’s “plan”, the savings have all been borrowed back. [emphasis mine]

Raising the debt ceiling is really, really unpopular. The idea that Congress should vote itself more authority to run deficits is really, really unintuitive. Even now, after many months of coverage and the most aggressive communications campaign this White House has attempted, Americans are closely split on whether we need to raise the debt ceiling by Aug. 2. Whenever I try to run out the logic of Obama simply refusing to allow Republicans to take the debt ceiling hostage, I end up with us approximately where we are now, but Obama’s numbers are lower, the GOP’s numbers are higher, a number of congressional Democrats have broken ranks, and Washington elites are firmly arrayed against the White House.

Based on the article above, it doesn’t look like any plan has sufficient votes to pass, which means the federal government is going to have to figure out what it’s like to live under a budget. What a concept!

The day of reckoning looms even closer: Credit rating downgrade for the U.S. government could come as soon as Friday. Key quote:

It’s not the debt ceiling that’s triggering a potential ratings change — it’s the trajectory of debt generated by the federal government.

And this:

The problem, as [the ratings agencies] see it, is not that America can’t pay its debts next month, but that America has grown its debt to such a degree that we can’t pay them in the long run without serious restructuring of the federal government — and this administration refuses to consider it:

The devil is in the details,” says a Republican strategist closely involved in the debt fight. “When you’re talking about $1 trillion [over ten years], you’re talking about $100 billion a year, but it doesn’t necessarily have to be evenly distributed among the years.” Does that mean it might be loaded mostly at the end of the decade, when it might not even happen? “That’s where you get into the details,” the strategist says.

On Wednesday evening, I noted the absurdity of Associated Press coverage characterizing the 5-page document with 3-1/2 whole pages of text issued by the “Gang of Six” as a “plan” — 12 times, plus in the item’s headline. Though I didn’t bring it up then, an obvious point to make about any of these items floating around Washington is that if the Congressional Budget Office can’t score it, it can’t be a plan. A month ago, CBO Director Doug Elmendorf told a congressional committee, in response to a question about President Obama’s April proposal, that “we can’t score speeches.”

And then there’s this:

Obama … claimed to have a $4 trillion deficit-reduction plan. The court eunuchs of the press corps were impressed, and went off to file pieces hailing the president as “the grown-up in the room.” There is, in fact, no plan. No plan at all. No plan whatsoever, either for a deficit reduction of $4 trillion or $4.73. As is the way in Washington, merely announcing that he had a plan absolved him of the need to have one. So the president’s staff got out the extra-wide teleprompter and wrote a really large number on it, and simply by reading out the really large number the president was deemed to have produced a serious blueprint for trillions of dollars in savings. For his next trick, he’ll walk out on to the stage of Carnegie Hall, announce that he’s going to play Haydn’s Cello Concerto No 2, and, even though there’s no cello in sight, and Obama immediately climbs back in his golf cart to head for the links, music critics will hail it as one of the most moving performances they’ve ever heard.

The only “plan” Barack Obama has put on paper is his February budget. Were there trillions and trillions of savings in that? Er, no. It increased spending and doubled the federal debt.

“A deal was never reached and was never really close,” Boehner wrote. “I have decided to end discussions with the White House and begin conversations with the leaders of the Senate in an effort to find a path forward.” Boehner blamed Obama’s demand for higher taxes and opposition to “fundamental changes” to entitlement programs such as Medicare, Medicaid and Social Security.

The important thing to note here is that so far only the Republicans have put forth any specific plan. It might not have been perfect but at least it was something. And the Democrats have rejected it, without offering any detailed counteroffer.

Oscar winner Jennifer Hudson is expected to perform at the birthday bash at the historic Aragon Ballroom in Chicago. The event will be one of the president’s biggest fundraisers of the year. Publicity literature featuring a red, white and blue Happy Birthday logo has already been produced. The event will be “multi-tiered,” the Chicago Sun-Times reported. The Hudson concert would cost $50; admission to the party $200; a premium seat $1,000; a souvenir photo with the president $10,000; and VIP seating and dinner with Obama $38,500.

Now it’s in the Democrats’ court: The Republican-controlled House today passed legislation raising the debt ceiling and cutting federal spending by $6 trillion.

Republicans have now passed their second bill this session that attempts to address the exploding deficits and the debt crisis, the first being Paul Ryan’s budget plan in April. Meanwhile, Democrats in the Senate haven’t bothered to pass any budget resolution in over 800 days, and the White House still refuses to offer any specific ideas.

“Not simply about one mission, [Genesis] is also the history of America’s quest for the moon… Zimmerman has done a masterful job of tying disparate events together into a solid account of one of America’s greatest human triumphs.”
–San Antonio Express-News